Netflix stock surges. Amazon after Blue Apron?

The shares of Netflix surged more than 10% in after-hours trading on Monday after the on-demand video streaming giant beat analyst expectations for top-line as well as subscriber growth. The amount of international subscribers surpassed the amount of subscribers in the US for the first time, growing by 1.01 million and 4.27 million respectively. Revenue came in at $2.79b, indicating annual growth of 32%. However, Netflix reported negative cash-flow of $608 million, down from negative $423 million reported last quarter.

As mentioned in the article, due to the immense, steadily growing subscriber base, coupled with vast financial resources and great viewing data, the barriers of entry for new competitors are only going to get higher as Netflix grows bigger.

Amazon with its Prime service, the price of which undercuts the price of Netflix in several regions, might be the only competitor able to make a dent in Netflix’s revenue. Reportedly, Amazon spent around $4.5 billion last year on new content creation. The difference between Amazon and Netflix? The management of Netflix is focused solely on video streaming – the same cannot be said about Jeff Bezos, for whom Prime Video is only a part of their business.

Around a week after Blue Apron held its rather embarrassing IPO, Amazon filed a trademark for the phrase “We do the prep. You be the chef.” Such a phrase can easily be related with prepared food kits and affirms how serious Amazon is about entering the food retailing industry. In case you have forgotten, Amazon is set to acquire Whole Foods, an American supermarket chain for roughly $13.7 billion.

According to data, Amazon gets a 5% customer bump from the acquisition, as 81% of Whole Foods customers already have an Amazon Prime account. Interestingly, those 81%, on average, spend 28% more than those, who don not have an Amazon Prime in the same period.

All is well in Amazonland, yet panic is starting to ensue in the grocery store and packaged foods industries. In a bid to maintain their market share in the food retail industry, more and more grocery stores are offering “meal kits” to satisfy the consumers’ wants for fresher and less processed products.

Amazon has a larger existing customer base, more resources and a supply chain that is ready-to-go, giving it the edge over its competitors.